The Nacha membership recently approved a new rule about Micro-Entries that goes into effect in two phases in September 2022 and March 2023. Since the new rule defines a practice already in place with many ACH Network participants for account validation, Nacha encourages the industry to start using the definition, the monitoring, and the description required in the new rule as soon as possible, because it provides a consistent framework and benefits all participants.
Micro-Entries have been used for some time, with a common scenario being a financial institution sending two small ACH credits to verify account information, followed by one debit to pull back the total amount sent. Under the new rule, Micro-Entry credits must be less than $1 each, and any debits that are sent cannot exceed the total value of the credits. Credits and debits must be transmitted to settle at the same time.
Formatting will also be standardized, with “ACCTVERIFY” required in the Company Entry Description field. This will enable RDFIs to easily identify Micro-Entries and will help ODFIs with their new requirement to watch for significant changes or fluctuations in the number of Micro-Entries they send.
Consumers will also benefit from this rule because it requires that the company name accompanying the transactions be easily recognizable as the same as or similar to what they will see on future ACH entries from the originating company.
On September 16, 2022, the first phase of the Rule takes effect, defining “Micro-Entry” as ACH credits of less than $1, and any offsetting ACH debits, used for account verification. The “ACCTVERIFY” description will be required as of that date as well. On March 17, 2023, phase two will require Micro-Entry Originators to use commercially reasonable fraud detection, including volume monitoring.
Stay tuned for more information on this new rule in upcoming education opportunities from ePay!